Bull market ‘could run through 2018’

UK fund managers resumed raising their equity exposure in November, a Reuters poll showed, with over two-thirds expecting the global equity bull run to continue throughout 2018.

However, UK investors cut their US stocks allocation by 3.8% to 24.7%, the lowest level since August 2016, reflecting concerns about valuations in the tech sector, which is up 39% year-to-date.

Reuters’ monthly asset allocation poll of 18 money managers was carried out between November 14 and 28, and showed investors raising equity holdings by almost 3 percentage points to 52.8%. “We retain a bullish outlook for global equities based on relative valuations, above-trend global growth and improving corporate profitability,” said Kamil Amin, an investment strategist at Charles Stanley.

Over two-thirds of poll participants who answered a question on the outlook for global equities said the bull run could continue throughout 2018, after world stocks indices smashed records again in November. “Stock prices have been rising for more than eight years but bull markets don’t die of old age,” said Trevor Greetham, head of multi-asset at Royal London Asset Management.

“There are few signs of the excessive growth, excessive valuation or excessive financial leverage that usually signal the approach of a bear market,” he said.

Justin Onuekwusi, a fund manager at Legal & General Investment Management, argued it was hard to see a recession occurring in 2018 or early 2019. But some managers expressed concerns about complacency and valuations, prompting them to take risk off the table.

US stocks were the biggest casualty of such moves, with managers top-slicing allocations after a stellar year that has seen the S&P 500 gain over 17%.

Having sunk to 13-month lows, sterling could fall by up to another 10% in the coming months should Britain crash out of the EU without a deal on future trade ties, luring more speculators to bet against the currency.